Add it all up and Canada’s debt burden is $3.2 trillion. That’s 166 per cent of GDP — fully four times the IMF forecast for 2020, writes Jack Mintz in the Financial Post. Below is an excerpt of the article, which can be read in full here.
By Jack Mintz, May 27, 2020
Canadian governments are lot more indebted than we think. And I don’t just mean the vast add-ons now taking place and for coming years. No, what I mean is that the official public debt figures mask the true debt position of our governments. This can send the wrong signal to taxpayers that we are OK when we are not.
The IMF reports that federal, provincial and local government net debt (assets deducted from liabilities) was only 26 per cent of GDP in 2019. By these numbers, Canada looks to be in good shape to weather the COVID crisis, with the 13th best net debt position among 35 advanced countries. (The best include Australia, the Scandinavian countries and Switzerland among others). The IMF also forecasts our debt burden will rise to 40 per cent of GDP in 2020 on a national accounts basis. That’s not including new spending on post-secondary students and the elderly and other subsidies announced this past month — so expect the number to be even greater just for this year.
But these net debt numbers suffer from some serious limitations. Be warned: we have entered a new phase of high indebtedness that we’re leaving for future generations.